Why working / non-working ratios no longer work for advertising

working to non-working ratio

As an industry we love our terms. Usually they are TLA (Three Letter Acronyms) like ATL, BTL and TTL. Or RFP, RFT and RFIs. And marketing technology digital buzz words are making this even crazier.

But there is a concept which has recently made a prominent return to the industry and yet it is totally outdated and no longer relevant. That is Working and Non-Working Spend. The reason for the sudden resurgence is a combination of management consultants who are pushing Zero Based Budgeting, not so much to drive marketing performance and return on investment, but more as a marketing investment framework to reduce the marketing investment and therefore budget.

The second source is the increased activity in investments in traditional consumer package goods brand companies by private equity and venture capital, and their use of the term to inform the market that they have magically discovered the investment strategy to turn the flagging performance of these entities around by simply reducing non-working spend and improving the working to non-working ratio.

In fact, as I write this, it seems so self-evident that you wonder why the schmucks that owned the business before it was bought by these clever investors had not done this already. Why wouldn’t you reduce non-working spend. After all, if it is non-working why are you spending anything on it anyway?